Ch17Ex01SECURITIES - Securities(f A bond that matures in 10 years was purchased The company is investing money set aside for an expansion project

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Acct. 3523 - Intermediate Accounting III Chapter 17, Exercise 1 Investment Classification (a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold. (1) Trading Securities. (b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock. (2) Available-for-Sale Securities. (c) 10-year bonds were purchased this year. The bonds mature at the first of next year. (1) Trading Securities. (d) Bonds that will mature in 5 years are purchased. The company would like to hold them until that mature, money has been tight recently and they may need to be sold. (2) Available-for-Sale Securities. (e) Preferred sock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time. (2) Available-for-Sale
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Unformatted text preview: Securities. (f) A bond that matures in 10 years was purchased. The company is investing money set aside for an expansion project planned 10 years from now. (3) Held-to-Maturity Securities. Review definitions on Pages 837 and 845 Held-to-Maturity Securities – Debt securities that the enterprise has the positive intent and ability to hold to maturity. Trading Securities – Debt securities; holdings of less than 20% of VOTING equity securities; and all NON-VOTING equity securities purchased and held primarily for sale in the near term to generate income on short-term price differences. Available-for-Sale Securities – Debt securities not classified as held-to-maturity or trading securities; holding of less than 20% of VOTING equity securities and all NON-VOTING equity securities not classified as trading securities....
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This note was uploaded on 06/05/2011 for the course ACCT 323 taught by Professor Eubanks during the Spring '11 term at Athens University of Econ and Bus.

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